- In New York City, where lenders are clamoring to finance real estate deals, building-related costs in the Big Apple could keep new construction loans, and, as a result, new construction projects, to a minimum in 2019, according to Bisnow.
- Greystone Bassuk President Drew Fletcher told Bisnow that although construction activity in the city has been healthy during the past few years, the amount of new project financing has decreased, mostly due to expensive land, rising interest rates and high construction costs. Nontraditional lenders — investment banks, finance companies and developers that are growing their own lending arms — have also entered the market, further crowding the field in competition for the best deals.
- Luxury residential projects are the least likely to win financing because of lenders' concerns about potential "depreciation in the asset class," Stillman Development International President Roy Stillman reportedly told Bisnow last month. Those projects and others that are successful in negotiating a deal tend to be standouts, like the glitzy, media-vehicle TSX Broadway mixed-use project in Times Square, which recently announced a $1.1 billion loan from Goldman Sachs. The $2.5 billion TSX Broadway project also highlights the trend of lenders wanting to pursue loans on their own, rather than throwing in with other financial institutions, to benefit from the payoff of the greater risk.
Manhattan is the epicenter of New York City real estate and construction loan deals like the TSX Broadway project, but developers elsewhere in the city and beyond also secured big loans in 2018.
In July, well before Amazon announced it was coming to town, the team of United Construction & Development Group, FSA Capital and Risland U.S. Holdings LLC secured a $502 million construction loan for the $700 million Court Square City View Tower residential project in Long Island City (Queens), New York. Financing was provided by a group of banks, led by JP Morgan Chase. Foundation work at the 802-condo project was already underway when the loan was announced, and the first units should be available for occupancy in 2021. The selection of Long Island City as one of the locations for Amazon’s new headquarters is sure to help drive presales.
Across the country, Related Cos. also found favor with lenders toward the end of last year and was able to win a $630 million construction loan from Deutsche Bank for The Grand, its $1 billion mixed-use project in downtown Los Angeles. The way is now clear for Related, also the developer of the $25 billion Hudson Yards project in Manhattan, to begin construction with AECOM at the helm as construction manager.